A Tale of Two Innovators

Henry Ford and Elon Musk

I’ve been reading My Life & Work, an autobiography of Henry Ford. The book was originally published in 1922, during the heyday of the famous Model T. The Model T, its manufacturing technology and the business philosophy behind it revolutionized personal transportation a century ago. The Model T’s story suggests parallels to Elon Musk’s unfolding Tesla revolution today.

Henry Ford and the Model T

1910 Ford Model TThe opening decades of the 20th century were alive with revolutionary ideas. Some of them, like Einstein’s theories, were truly fundamental. Many more were technical advances, across a number of fields – not just mechanics. Sometimes technical advances converge. That’s what happened with Ford’s Model T.

Converging Technologies:

Electrification: Electricity came to industry in the early 1900’s. Electricity provided the power and the practicality necessary for the development of large – scale manufacturing facilities, for automation and for moving assembly lines.

Texas Oil Boom: The gusher of crude oil at Spindletop Hill in 1901 began the Texas Oil Boom, making cheap petroleum a product needed a volume application.

Internal Combustion Engines: Gottlieb Daimler is credited with the first commercial automobile in 1892. Daimler’s vehicle used a four cycle internal combustion engine that was powerful enough, portable enough, light enough and rugged enough for an automobile. Henry Ford built and used a similar engine to power his first “gasoline buggy” in 1893. The gasoline engines that power most of today’s cars at direct descendants of those Daimler and Ford used.

Vanadium Steels: Vanadium steel alloys were first used around 1900. Vanadium alloys are much stronger than conventional steels, so metal parts could be designed to be smaller, lighter and stronger than the conventional steel parts they replaced. Vanadium steel parts were used extensively in the Model T’s frame, before other automobile manufacturers were even aware of its existence.

Scientific Management: Fredric Taylor made a science of the role of people in manufacturing. Taylor divided production into discrete tasks, measured the time and human effort necessary to perform each task and, practically speaking, invented the concept of productivity. Henry Ford applied Taylor’s ideas in his high volume, low cost manufacturing methods.

Business Philosophy

Ford’s idea was to provide reliable personal transportation for everybody. To use Ford’s own words:

“I will build a motor car for the multitudes. It will be large enough for the family but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man earning a good salary will be unable to own one – and enjoy with his family the blessing of hours of pleasure in God’s great open spaces.”

Ford’s idea with the Model T was to persistently reduce the price in order to open new strata of demand. Then he continually reduced costs as throughput increased. Cost reductions were through productivity and elimination of waste. In 1914, Ford voluntarily established a minimum wage of $5.00 a day – almost twice the then–prevailing wage rate in manufacturing – heavy Detroit.

Elon Musk and Tesla Motors

Today, a century later, Elon Musk is attempting to upcycle the automobile by replacing the internal combustion engine with electric motors. Electric automobiles are not a new idea – Studebaker, for example, produced electric vehicles from 1902 to 1912, before being overwhelmed by Model T’s. However, like Ford, Musk lives in a time of new and converging ideas. These converging ideas may well change everything.

Converging Technologies

Lithium – ion Batteries: The exploration of space and the advent of mobile electronic devices like cell phones has fostered an avalanche of innovations in battery technology. Lithium – ion batteries are the current favorite due to high storage capacity, long battery life and low weight to storage capacity ratio. Tesla has partnered with Panasonic to build a gigafactory to mass produce lithium – ion batteries for Tesla automobiles and other uses. The gigafactory is expected to start production in 2016, with the ability to produce enough batteries for 500,000 automobiles at full initial design capacity.

Variable Speed AC Motor Drives: Until recently, heavy, expensive DC motors were necessary for variable speed, constant torque applications like automobiles. Today, stable, reliable variable frequency drives allow the use cheap. Light, efficient AC motors in those applications.

Environmental Concerns: Internal combustion engines burn fuels under conditions of high pressure and temperature. Environmentally undesirable by-products, including oxides of carbon, sulfur and of nitrogen, are present in the engine exhaust. Electric vehicles have no exhaust emissions.

Robotics: Advances in computer – driven robotic technology are making significant product quality and productivity contributions to manufacturing. Tesla makes increasingly extensive use such technology.

Business Philosophy

Musk and Tesla propose to build no compromises, fully electric vehicles. “No compromises” means that customers enjoy the advantages of clean, quiet electric propulsion without compromising safety, performance, reliability, cost to operate, internal space or any other characteristic that matters.

To accomplish this, Tesla is engaged in a three step program of commercial development and introduction. The first step was a high price, low volume sports car that provided proof of concept. Tesla’s produced and sold 2,250 Roadsters in 31 countries between 2008 and 2012 at more than $100,000 each.

Tesla Model SThe second step is a premium priced, medium volume sedan and SUV that brings sales volume up sufficiently to confront the realities of everyday driving in many countries. The $70,000+ Model S sedan and the slightly higher priced Model X SUV are expected to sell a combined 55,000 units in 2015.

The third step is a smaller, more popularly priced model that will challenge the heart of the automobile market in developed countries. Tesla’s Model 3 is expected to begin production in 2016 or 2017, priced starting around $35,000. Combined volumes for Models S, X and 3 are forecast at 500,000 units per year by 2020.

If 500,000 vehicles sounds like a very big number, consider that, in 2015, about 15 million automobiles will be sold in the U.S. alone. Also consider that over 15 million Model Ts were produced and sold over its 19 year production run a century ago. Consider as well that the population of the U.S. today is three times what it was in 1920. It could well be that Tesla may be that one gigafactory isn’t enough.

Chuck - Austrian AlpsThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington


P.S: Contact me when your organization is serious about pursuing Sustainability … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.

Photo: 1910 Ford Model T – Creative Commons via Wikipedia

Quotation: My Life & Work, Henry Ford’s autobiography, originally published in 1922